Gasoline Prices: The price of gasoline is declining more slowly than oil, illustrating how consumers aren’t fully benefiting from falling commodities prices.

Typically, gas prices go up and down in tandem with crude oil, the main ingredient. But according to The Wall Street Journal, oil prices have been falling much faster than gas prices. Drivers have paid at least $1 billion more for gasoline than they would have if the historical pattern had continued this year, according to government and industry statistics.

Regular gasoline prices have fallen more than 28% in the past year to an average of $2.18 for a gallon of regular unleaded. By comparison, Brent crude, the global benchmark for oil, has fallen more than 50% to about $50 a barrel.

Harvest continues its momentum as the weather continues to cooperate. Many locations now with significant piles of corn on the ground. Central Valley Ag hubs continue to aggressively serve our area producers as locations begin to fill up. There is a lot of corn out there, and this is a blessing for most area producers.

Increased yield: Many area producers are seeing some pretty impressive yields! Increases in yield can significantly change your business plan, and could be the difference needed with the grain prices of today. The chart below is an example, if you marketed/planned on 175 bushels per acre for corn and 50 for beans, you established your breakeven based on cost of inputs etc. When the final yields come in, there is additional profit to be had across each and every bushel. This is one of the reasons break even calculations are so important in budgeting and planning. These windfall bushels are a great thing, so congratulations!

Corn/Beans: The story is consistent between the two, corn and beans continue their range bound ways while we wait for a story which sends the market one way or another. Though it seems there isn’t much more negative news to be had, the trade has built in with record yields, corn on the ground, and decent export numbers. I think keeping an eye on South America, Ukraine & Brazil for a weather headline or something to give us an opportunity moving forward. Another consideration is next week’s USDA Supply and demand report scheduled for November 11th.

Weather:

The Weather Channel – If you are not quite ready for the chill that is normally associated with November then you may be in luck. A warmer-than-average November is expected for the eastern half of the U.S. while colder than average temperatures are likely in parts of the West.

“The big news heading into November is an unusually strong sub-seasonal pulse that will oppose and overcome the baseline El Niño signal. What this means is that, for at least the first part of the month, the pattern will be more typical of La Niña conditions than El Niño conditions, with cooler temperatures across the West and unusually warm temperatures across the East,” said Dr. Todd Crawford, chief meteorologist of WSI, a division of The Weather Company.

Halloween weather was beautiful, and there was no football game scheduled for high school. So we had over 100 Trick or Treaters. The best part, we handed out full size candy bars, so the kids thought that was a great thing. We did end up spending all day setting up our cemetery, and the boys and one of their friends got all dressed up to “scare” the kids. It was a lot of fun for everyone!

Global markets rallied Friday after Fed Janet Yellen laid out plans to increase rates by years end, but the rally was short lived. Global stock fall this morning due to concerns of China’s economy, Dow, S&P, Stoxx Europe 600, Asia’s Nikkei 225 all fell this morning. Shares in commodities giant Glencore sank over 20% as they suffer from a slump in commodities.

Apparently another Government “shut down” is looming as of October 1st, 2015. With Speaker of the House John Boehner’s resignation from congress, he agreed to stay until the end of October to assist with passing a bill to prevent shut down.

This afternoon weekly crop conditions and harvest progress will be updated, I am anxious to see as more producers begin harvest. This Wednesday is the USDA Quarterly Stocks report, in the event of a market reaction it is wise to have nearby cash offers, and new crop HTA offers in place to capitalize.

For Fun

A Lunar Eclipse last night for all to see! Last night was the first full lunar eclipse I have ever seen. A blood red moon, and it happened to be a super moon, something very rare!

lunar eclipses occur when Earth’s shadow blocks the sun’s light, which otherwise reflects off the moon. There are three types — total, partial and penumbral — with the most dramatic being a total lunar eclipse, in which Earth’s shadow completely covers the moon. A lunar eclipse can on occur when the moon is full. A total lunar eclipse can happen only when the Sun, Earth, and Moon are perfectly lined up. Anything less than perfection creates only a partial eclipse or nothing at all.

My family and I decided to head out into the country last night to watch the eclipse. A peaceful quiet evening, a chance to talk with my family about whatever, but many good questions about science in general and the eclipse. The only thing that would have made it better would have been a telescope.

Like this:

Global stock markets climbed today, rebounding from heavy losses last week after the Federal Reserve left interest rates on hold. The Dow Jones Industrial Average gained 87 points, or 0.6%, to 16471 in early trade. The S&P 500 also rose 0.6%, after both indexes declined sharply on Friday. The markets steadies after the Fed decision, though many people debating whether the Fed is going to raise rates yet this year. We are most likely in for a period of choppy markets.

Commodities: Gold prices jumped after the Federal Reserve’s decision a day ago to hold interest rates steady, Prices for the metal, which have lost more than 7% in the past year and have been bumping along five-year lows, touched their highest level in more than two weeks on Friday, gaining $20.80, or 1.9% to settle at $1,137.80 a troy ounce on the Comex division of the New York Mercantile Exchange. The gains weren’t limited to gold. Silver rose 1.2% to $15.163 an ounce, its highest level since late August. Platinum gained 1.6% to settle at $984.40 an ounce, and palladium rose 1.9% to settle at $610.85 an ounce.

Weather:

Dec Corn +1 ¾ @ $3.79
Nov Beans+5 ¼ @ $8.72 ½

Since last week we have seen grain markets lose some ground. With our high of the week coming in on Tuesday at @ $3.95 for Dec corn and $8.94 for Nov beans. With a wide open week for harvest in many parts of the Midwest, it seems good harvest conditions pressure grains, despite good export numbers this am.

Corn: Corn was a 2 sided trade this am opening lower, but pushing higher by 9am. Little to report as far as fresh news, conditions for harvest seem to be moving right along, wet corn programs popping up around as some producers get an early start. Ethanol remains steady, and exports can be debated (knowing there are cheaper supplies in South America). Also the feed and residual can be a variable to give us some movement. But without a story, we are likely to see corn push lower into harvest.

Beans: Beans continue getting beat down by the same thing….dollar higher, Brazilian acres, uncertainty in China. At some point the story gets old, and traders move on. Not saying we will see a rally, just saying we need something more to make a new low than the same stories, with $8.53 ¼ being the bottom for the November contract. Seems like beans are happy in the range of $8.65-$8.94 as they have been since Aug 25th. At least until the story comes!

For Fun:With the Christmas season fast approaching………ha ha….got you! It’s not even Halloween yet! But for some reason we are all seeing Christmas stuff in the stores. Every year I catch myself saying….I swear it’s earlier each year. Referred to as the “Holiday Creep” stores have been pushing Christmas displays and promotions into stores earlier and earlier each year. So this is a real thing? I walked into a store in Lincoln this weekend to see Christmas trees……

In 2011 Walmart launched it “holiday layaway program” a month early (in mid-October), and now in 2015 Walmart launched it in August! Kmart airing its first Christmas commercial last year in September, so get ready for the Christmas toy commercials. Yikes! I personally enjoy Christmas, but I am tired of it before it even gets here. I mean really, Christmas? I haven’t even bought my trick or treat candy yet…..know why? It not even October yet…..

But consumers are to blame, apparently enough get excited and start buying. Retailers only begin early because it increases sales, so crank the Christmas tunes and head on over to your local store and pick up a zombie mask, a Christmas tree, and a gallon of milk.

The US stock market made an aggressive comeback this morning gaining back Friday’s losses, and the Chinese market also moved higher overnight easing tension in grains, however, strengthening currency has long term implications to exports. US Dollar losing some traction this am, and oil down but back above $45

Grain Markets 12:00pm

Dec Corn +3 @ $3.66
Nov Beans +13 ½ @ $8.80

Macro markets mentioned above have somewhat stabilized, gives us some strength on the overnight session as well as this morning. I think we all know the markets have been less than eventful, and I cannot give you anything too exciting this week. Glad to see a bounce this morning in the right direction. Though grain has proven to be range bound in the beans, and slightly negative each day in the corn, we are likely to see some additional volatility with a short week and a report on Friday.

USDA supply and demand report later this week on the 11th. It will be interesting to see if there are any changes to estimates. It doesn’t seem like the trade is expecting to see much for a change if any.

My largest concern right now is basis. Once we get into harvest and corn is going onto the ground, we are likely to see basis levels drop, so finding tools to limit basis risk for your harvest delivered crop should be at the top of your list for now.

Weather

Fuel – AAA’s National Average for gasoline is $2.391, compared to $3.438 just a year ago. Diesel $2.553 compared to last year at $3.796.

Nebraska current average for gasoline is $2.528 which is above the national average. Take a look at the chart below, you can see Nebraska has been at orbelow the national average all year, until mid-July where Nebraska made its way to .137 over the national average. It would be nice to see Nebraska get back down to average or below.

The good news is diesel at $2.481 is below the average, and with the downtrend in oil likely to give us another break at the pumps, at some point it may be worth looking at filling on farm fuel storage for harvest.

Strategy: If the board gives us a rally, a March Corn $4.00 call might yield a 20-25 cent premium which you can add to your bottom line. Worst case scenario, you have a $4.00 corn sale in February. Then again, $4.00 sounds nice.

Grain markets were hammered overnight on the Chinese news Shanghai index closing down 8.49%, Japans Nikkei is down 4.61%, and the German DAX down 3.73%.. Seeing a rebound at the morning open. We once again see corn green and the beans red. Beans taking the brunt of the punishment, now seeing new crop cash prices today with 7 in front early this am. Closing the overnight down .31 1/4 on beans and -.10 on corn. The U.S. Dollar index trading down 1.26% and crude down $1.57 at $38.88/barrel.

Weather – The National Weather Service’s outlook for September calls for below-normal temps across the Corn Belt, with above-normal precipitation expected across western Iowa and the Central Plains, including Nebraska. Equal chances of normal, below- and above-normal precip are expected in eastern Iowa to the East Coast. The forecast should increase concerns about crops that are lagging due to late planting.

Corn – Really continues its range bound trade, I have mentioned verbally to many producers that I am not as negative on corn. It just seems corn wants to stay in the $3.50-$4.00 range. Though if oil continues it downtrend, this could negatively affect ethanol demand right here in our back yard. On the bullish side, many including Profarmer think the USDA is overstating yields, and the unseasonably cooler temps in our area have some talking early freeze.

Beans – Price just continue to fall each week, beans do not seem too afraid to head lower, losing 25 cents last week and another .32 this morning. Chinese markets provide concerns for U.S. Beans export sales. We could see a turnaround Tuesday type of event, but longer term I am afraid beans do not offer much for bullish news.

Pro-Farmer – On Friday, Pro Farmer announced its national corn and soybean forecasts after touring the U.S. from Ohio to South Dakota last week. Pro Farmer sees 2015 corn yield at 164.3 bushels per acre compared to the current USDA’s August forecast of 168.8 bushels per acre. Pro Farmer’s soybean forecast was lower than the USDA by .4 bushels per acre at 46.5 bushels per acre. Pro Farmer pegged 2015 corn production 363 bushels below the current USDA projection at 13.323 billion bushels. Soybean production is estimated at 3.887 billion bushels.

For Fun – With Football season just starting, I realize a diet is not in the future, but rather wings and beer. Who doesn’t love getting together for the occasional game with friends and enjoy the great game of football. To start off the season here are 10 facts about the NFL you may not know:

The New England Patriots were almost named the Bay State Patriots.

If you signed up for the Green Bay Packers season ticket waiting list today, you’d have to wait almost 1,000 years to get your tickets.

Wilson, which has been the exclusive maker of NFL footballs since 1941, produces 4,000 balls per day, or one for every Eli Manning interception.

Only the Green Bay Packers has ever won 3 NFL championships in a row (thus disappointing Pat Riley) and never once in the Super Bowl era.

Despite the misnomer that the NFL can only play Sunday, Monday and Thursday, the league has actually played games on every day of the week.

The Super Bowl trophy costs $25,000.

The oldest record in the NFL record book is one of the most famous: Ernie Nevers scored 40 points in a 1929 game, getting six touchdowns and four extra points.

Fred Dryer is the only player with two safeties in one game.

The total audience for the first televised football game in 1939 was 500, about 112,200,500 less than watched last year’s Super Bowl.

In the modern NFL draft, there’s only been one year in which a quarterback hasn’t been selected in the first two rounds.

Like this:

U.S Loosens the longtime ban on oil exports. The U.S Government is allowing energy companies to trade oil with Mexico, which is a small step toward lifting the 40 year ban which prevented the selling of U.S. crude. This looks to give American drillers a new market for their product. This is potentially positive for oil prices and positive for grain.

The first round of FSA acreage numbers come out this morning, this data is very early in the game, and the long term accuracy is questionable, FSA report as of August 1, showed slightly larger than expected total US prevent plant acreage at 6.44 mln acres, with corn at 2.300 mln acres, beans 2.173 mln acres

For Fun: With School either starting soon, or already begun, I now have 2 junior high boys. My youngest, now entering 7th grade told me he is scared. Scared he won’t find his classes, scared he won’t remember his locker combination. I told him it will be okay…..the crazy thing is….I still occasionally have that dream as an adult. You know, when I’m in Junior high lost, trying to find my next class, can’t get my locker open, and freaking out. I am sure you have had this one too, so maybe it is that scary for a 7th grader. Especially if I still have that dream….

On a lighter note, what’s the deal on #2 pencils? I always wondered why it “Must be a #2 pencil” for your SAT test. Despite the “bubble” test now being taken over by computers, I still thought it might be interesting for the older generation (you know….the ones born in the 1900’s). The pencil numbering system is a reflection of how hard and how black a pencil’s lead is. Pencils numbered higher than 2 have harder leads and are often used by engineers, architects, and draftsmen because of their harder points. If you mess up and use a #3 pencil on your test, it won’t matter, it might be a bit harder to erase if you make a mistake is all.

Like this:

The U.S Stock market opens fairly flat this morning, slipping into the morning. July has been a rough month for commodities which continue their negative streak this morning. Copper and Aluminum fall to 6 year lows.

Oil opened deep in the red, slipping to levels not seen since March. Crude’s supply and demand picture looking bearish with China being the second largest oil consumer. Concerns about the condition of the Chinese economy continues to leave a bearish tone for many investors.

Greek share prices plunged today after trading resumed in Athens following a five-week halt. The Athex Composite earlier today traded as low as about 615, its lowest level in about three years.

Weather this week looks good for crops in the field with temps in the 80’s and a chance of rain each day.

Corn/Beans

It seems the negative direction continues this week. Primarily concerns of Chinese demand due to economic uncertainty, the continued strength in the U.S Dollar makes South American corn look cheap and potentially hurting U.S Exports, there just doesn’t seem to be a reason to be bullish. In addition, the USDA crop report is coming August 12th.

Weather news could be a factor, however, the weather across the Midwest continues to be a non-event.

Strategy: For those of you currently holding a corn hedge/HTA we are consistently an opportunity to roll from December to March for about 10-11 cents. If you are planning to carry some of your corn into January or later, now may be the time to lock in the carry. (Example $4.50 Dec Hedge, roll to March adds .11 = $4.61)

Basis: As the market pushes down, we may see basis opportunities, with harvest approaching, it is going to be time to start watching basis levels, and setting those pre-harvest.

For Fun:

It’s been a year since our trip to Universal Studios, when we had the opportunity to go to “Springfield” and stop by Duff’s Tavern for a “Duff” beer. No chance of buying one to go, Orlando and Los Angeles are currently the only place you can go get yourself a bottle of the fictitious beer. Until now…. there was no discussion of making it commercially available, until recently Fox has decided to begin the venture starting internationally!

Quoted below from The Wall Street Journal

“For decades, real beer sellers from Australia to Germany to Colombia have been trying to capitalize on all this fake marketing by putting real versions of Duff Beer into the market—only to be shut down after hearing from lawyers for “Simpsons” owner 21st Century Fox.

But this week, the media giant is entering the Duff Beer business itself—beginning in Chile, with plans to roll out to more of South America and Europe by early next year.

The company has been consulting with a brewmaster to get the flavor just right, and plans subtle packaging with no obvious nods to the TV show—just an exact replica of the cartoon brew that will play like an inside joke for Simpsons superfans.

As for the domestic market, outside of the “Simpsons” section of Universal’s theme parks in Orlando and Los Angeles, no Duff is available in the U.S., but Fox isn’t ruling it out.

“I think there’s potential to have Duff everywhere in the world,” said Jeffrey Godsick, president of the media company’s consumer products division. (21st Century Fox and Wall Street Journal-owner News Corp were part of the same company until mid-2013.)

The global thirst for Duff is understandable. “The Simpsons” is the longest-running scripted series in television history, and so widely distributed that Fox executives say an episode is airing somewhere in the world, at all times, day or night, 365 days a year.”

Like this:

The big news on Monday was the substantial dip in the Chinese stock market, that trend continued and the 3 day sell of knocks 11% off the Shanghai Composite. Despite government efforts to reverse the trend, the Chinese stock market continues to decline since peaking on June 12th.

Commodities had a significant sell of yesterday pulling down gold, silver, copper, cotton, soybeans, corn, cattle, and Crude oil futures have continued to slide to a new 4 month low near $47 a barrel, but headed back in to positive territory midday today.

U.S Dollar strengthens again today, as many investors look for the fed to increase interest as early as September.

Ford reported a 46% increase in net income for Q2, logging its largest quarterly profit ever for North America.

Crop condition was raised from 69% to 70% good to Excellent on corn as compared to last years 75%, and soybeans were left alone at 62% good to excellent as compared to last years 71%

Corn

December Corn has lost .73 cents in the last 10 trading days, interestingly enough earlier this month, we went from the current trading level to the contract high in just 13 days. We have literally went from $3.81 all the way up to $4.54 and back to $3.81 in 23 days. Talk about a roller coaster ride. There seems to be a lot of noise and no one is exactly sure what to hear, from a weather scare and flooding, to key fundamentals influencing world carry, Political, and of course the macro markets. It seems they are all competing for attention.

A new gap was created yesterday. We now have 2 gaps in the Dec ’15 corn contract, from a technical perspective we may see corn continue to trend down into contract lows prior to retracing those gaps. Keep in mind the gap retracement could be post-harvest.

Strategy: As the market dips, and affordable way to participate in upside potential on sold bushels is a simple “buy back strategy” utilizing options. Which keeps capital risk low.

Beans: Uncertainty in China w no doubt caused a lot of pain for the bean market yesterday seeing a 30 cent drop on Monday in Nov beans. A bit of a turnaround Tuesday feel today though as beans gained at the open, but only up 5 cents at noon. Beans are feeling a lot of pressure from the macro markets, fear of Chinese demand and the US Dollar making South America more appealing to international buyers.

Strategy: Beans may be a painful ride down, lock in a sale at a profitable level either cash or utilizing an HTA. Bonus premium offers may be used to bring the value of the sale up.

U.S. stocks were little changed early Monday following a batch of better-than-expected earnings from companies such as google (jumping 16.3%) and Hasbro (jumping 5.8%). Investors turned their attention to a stream of corporate earnings reports from several large companies this week. The Nasdaq ended at a record level on Friday, Gaining 46.96 points, or .9%, to 5210.14. Googles surge is to blame posting their 3rd largest daily gain ever.

The U.S. Dollar rose to its highest level as compared to the Euro in nearly 3 months on Friday, likely due to the continued discussion of the feds interests rate hikes later this year.

Gold Hits 5 Year Low

Gold tumbles, hitting 5 year low at the open today after 23 days of steady decline. Gold likely weighed down by the U.S Dollars continued gains and the continued concern of the first U.S interest rate increase in more than 9 years. While some analysts believe the down trend is the market taking advantage of low liquidity as opposed to actual fundamentals.

A weaker start to the open this week due to favorable weather through the Midwest. Fridays CFTC report showed spec funds long 130k corn, and just over 80k beans, the funds are liquidating some of these positions today causing some market negativity. Also expecting crop ratings report out this afternoon, not looking to see much of an adjustment.

Corn – With today’s low landing right at the 20 day moving average we are likely to see some support in the $4.21 area for Dec Corn. The next support line would fall at $4.10. I will also mention there was a “Gap” at the open, many technical analysts believe there is almost always a gap retracement. If that holds true we should see ourselves back to at least $4.29 ¼ in the short term.

Beans opened very weak this morning below $10, but have gain back most of what was lost on the overnight by mid-morning. The story in beans may not play out until August when USDA resurveys Arkansas, Missouri, and Kansas. The trade believes we may see USDA reduce yield estimates by a few bushels. Until then it seems Nov Beans will continue to see support at $9.80 and resistance at $10.30 giving us a wide trading range, until we get some news sending us one way or another.

For Fun: Just returning from a vacation in South Dakota, I took the family to see some of the most impressive marvels of nature starting with the Badlands, the Needles, Sylvan Lake, Custer Park and even crystal cave. Then of course Mt. Rushmore, something that many of us have seen but forget how truly amazing the process of making it was. All done through private funding, this is not likely ever seem something of this magnitude in our lifetime being built. Mt. Rushmore cost $989,992.32 to build, taking 14 years to complete, with over 400 workers to complete, there was not one single death. Despite the fact that I have been there many times, it was the first with my boys. It was a fun and affordable trip.

That said, there are so many things to do in the midwest over a long weekend, things we easily forget about, its easy to get caught up in the hustle and bustle of everyday life, or fixate only on glamourous trips. When there are some great things our children have never seen right here in our back yard! I will add the liesure trip and lack of internet…gives a lot of time to learn about your family, and hold a lot of conversations you may not ave had otherwise.

It feels like there is so much to talk about with the 180 degree shift in fundamentals on June 30th after the release the USDA stocks report. before the dust settled, anticipation of yet another report caused new buyers to enter the market giving us a nice rally starting Thursday last week. The trade felt the July 10th USDA Supply and Demand report would provide a reduction in yield expectations. However the USDA left yields unchanged. This would be seen as negative, but the buyers still came, posting new highs in December corn reaching the contract high of $4.49 and November Soybeans reaching $10.36. It seems buyers really want to buy, despite somewhat negative news. This is quite a shift from just a few weeks ago when there was record selling. Looking forward, many traders are still confident we will see a yield estimate reduction in the USDA August report.

To summarize Friday’s report charts provided below:

*Yield was left unchanged, but will be updated in the August S&D report
**Acres were pulled from the June 30th Planted Acreage report

It always feels better when we are in a bull market……when buyers keep grain supported. We are still seeing some weather still remains our primary focus as well which continue to add premium to grain prices. Hopefully this will continue to push the bullish excitement and provide more selling opportunities moving forward.

Strategy: It seems a shame not to reward such a nice rally with a sale. With the strength in the market, and question of what is yet to be seen as far as market potential, it may be wise for producers to look at using some sort of floor strategy to protect the bottom, yet participate in upside potential.

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